CoinfloorEX created a year ago as a unit of London-based Coinfloor, the UK’s oldest Bitcoin exchange, will relaunch in February with a new rebranded name “CoinFLEX” (Coin Futures and Lending Exchange). The home-based Hong Kong firm will launch physically delivered cryptocurrency futures.
The CoinFLEX derivatives with 20 times leverage will be available to the Asian markets the next month.
In an interview for Bloomberg, Mark Lamb the CoinFLEX CEO said that the exchange will offer futures for Bitcoin, Ethereum and Bitcoin Cash.
CoinFLEX, the new competitor in the crypto futures market aims to launch before Bakkt and Erisx. Projects that have been featured frequently in the media and are expected to bring institutional investors in cryptocurrency. Bakkt will offer Bitcoin future contracts with physically bitcoin delivered. The cryptomarket is expecting that Bakkt will increase the bitcoin demand. Bakkt announced some days ago to have completed the first round of funding.
ErisX announced in October 2018 wants to dispatch a derivatives exchange platform for digital asset futures and spot contracts in one place.
Both Bakkt and ErisX, are pending approval from regulators and are expected to launch in the first months of 2019. Both projects seem to have the support of wall street investors.
Offering 20 times leverage CoinFLEX also competes with BitMEX the biggest bitcoin futures exchange in the world which is also a Hong Kong based crypto exchange with a 100 times leverage.
In the interview Mark Lamb noted:
“I’ve been in the market for six years, so seeing this kind of 80% correction is really nothing new. Bear cycles in crypto can go on a long time but ultimately, this is an asset class that it is one of the most fascinating, volatile – which is great for traders – assets in the world. And it’s really exciting because it has the potential to become one of the major currencies in this world.”
He clarifies the advantages CoinFLEX has over its competitors.
“If you’re trading a cash-settled future, you’re open to manipulation of the index at the time of settlement. If you’re a market maker where you’re doing a basis trade, where you’re arbitraging the cash and spot markets, the cash markets versus the futures market, what you really want to be sure about is, at the time of expiry, you know exactly what you’re going to get…
“With a physically-delivered future, it really ties the future’s price to the actual, underlying asset because at expiry, everyone knows what they’re going to get. Everyone who’s short, delivers Bitcoin, receives cash. Everyone who’s long, delivers cash, receives Bitcoin. So that kind of tying down to the real world allows these types of futures to be used for much more than just speculation. They’re great speculative tools, but they become useful for commercial hedging, hedging miner exposure, hedging and OTC trade, or making markets.”
Mark believes that the Asian markets will dominate the crypto markets wile Bakkt and ErisX will struggle with the Us regulators.
“We think that that’s likely to continue because the US is trying to clamp down on the leverage offered by these futures, and also, the time duration offered by these futures contracts.”
Lamb says that is not what merchants need.
“If you’re trying to deal with a global audience versus one country or one region, it’s a very different picture. If you do end up getting regulated by one regulator or one jurisdiction, or one nation, you’re actually limiting the amount of exposure and the amount of outreach you can have to the rest of the global audience. So we’re really excited about being a global, large, scalable crypto derivatives exchange, and for that approach you need to be offshore.”
CoinFLEX consortium is operated and owned by Bitcoin early investors and Bitcoin Cash supporters Trading Technologies, Mike Komaransky, Roger Ver, Dragonfly Capital Partners, Global Advisors, Alameda Research, Amber AI, B2C2, and Grapefruit Trading.
The new exchange will offer also offer future contracts for the Tether stable coin enabling traders and investors to trade quickly and efficiently without the need for bank wires that might slow down the process.
Many think that all those derivative markets increase the cryptocurrency liquidity creating fictive cryptocurrency or Bitcoin paper.
But since the comin futures are backed by physical crypto the impact might be possitive for crypto.
How will those incoming futures affect cryptocurrencies?
Feel free to post your opinion in the comments below.